Wednesday, November 4, 2009

NY AG Files Antitrust Suit Against Intel

[Updated 4:10 p.m.] New York Attorney General Andrew Cuomo on Wednesday filed a federal lawsuit against microchip giant Intel Corp. making his the first formal antitrust action against Intel by any U.S. agency in more than a decade. The FTC launched an examination into Intel in 2008 but has not made its probe official. Cuomo's complaint charges that Intel violated state and federal laws by engaging in "a worldwide, systematic campaign of illegal conduct" to maintain its dominance in the microprocessor sector.

"Rather than compete fairly, Intel used bribery and coercion to maintain a stranglehold on the market," said Cuomo, who served Intel with a wide-ranging subpoena in January 2008. "Intel's actions not only unfairly restricted potential competitors, but also hurt average consumers who were robbed of better products and lower prices," he added. Intel has repeatedly denied antitrust allegations and filed an appeal against a recent European Commission ruling.

More than 20 lawmakers recently urged Justice Department antitrust chief Christine Varney and FTC Chairman Jon Leibowitz to view the European antitrust ruling with a critical eye and weigh its impact on U.S. high-tech firms. The Sept. 18 letters to Varney and Leibowitz, spearheaded by Oregon Reps. Earl Blumenauer, a Democrat, and Greg Walden, a Republican, argued the Intel ruling "is the latest evidence of a troublesome trend in Europe toward regulatory protectionism."

National Journal magazine ran a feature story earlier this year on the lobbying battle brewing between Intel and rival AMD. Read the article here (subscription required).

AMD Executive Vice President Tom McCoy said Cuomo's 83-page complaint details "explicit evidence of Intel's harm to U.S. consumers and computer manufacturers." "Stopping that illegal harm will serve the settled purpose of the American antitrust laws: ensuring that innovation is unconstrained and competition is free to serve consumers."

Computer & Communications Industry Association President Ed Black said internal e-mails revealed by Cuomo "illustrate that contrary to Intel's assertions, the microchip manufacturer knew that its actions potentially violated the law." ""Intel certainly had other clues more recently including the findings against them by antitrust officials in Japan, Korea and the EU," Black said.

Association for Competitive Technology President Jonathan Zuck said New York's "effort to micromanage competition in the chip market may benefit AMD, but it is also likely to harm the interests of software developers and consumers." While Cuomo makes some bold accusations about Intel's behavior, experts are already questioning whether there is any real evidence to support the complaint, Zuck said.

The Progress and Freedom Foundation's Ken Ferree said it is unfortunate that Cuomo decided to interfere in a market that is actually working for consumers. "Despite all of the rhetoric and grandstanding, there is no evidence that I've seen of any harm to Intel's competitors, to competition, or to consumers," he said.